Fluctuating energy costs are forcing businesses to change their spending plans, hampering their market competitiveness, workforce training plans, and decarbonization goals, according to research from ABB Electrification.
The findings come from Zurich-based ABB Electrification, the appliances, electrical, and electronics manufacturing arm of industrial automation provider ABB. The unit recently released its “Energy Insights survey,” which polled 2,300 leaders from small and large businesses across a range of sectors.
Survey results showed that in reaction to broad swings in energy prices and security in the last year, businesses are forecasting lower profit margins (34%) and cuts to spending in some areas (34%), leading to a shift away from investment in R&D and other business growth initiatives. Over a third (38%) have or plan to reduce technology investment, while a third (33%) expect to cut spending on infrastructure and 31% foresee a decline in marketing spend.
And despite tight labor markets, businesses also said they have reduced investment in their workforce in the last year because of increased energy costs and the need to implement mitigation measures. In fact, three of the top five business areas highlighted for budget reductions are related to the workforce: 42% will spend less on recruitment; 38% will decrease spending on salaries, overtime and bonuses; and 37% will reduce investment in staff training and development.
Those pressures could also delay progress on climate change, since meeting carbon reduction commitments is currently considered less of a priority than reducing energy costs, ABB found.
Despite those challenges, the electronic products maker ABB Electrification says that much of the technology that can help businesses to optimize their energy management and reduce costs, is already widely available.
“Businesses say they need to insulate themselves from energy prices and insecurity and are re-evaluating current and future spending plans. Taking action to mitigate this is a clear priority, but this doesn’t have to be a catalyst for potential workforce or environmental impacts,” Morten Wierod, president of ABB Electrification, said in a release. “Investing in smart and sustainable on-site renewables and energy efficiency technology means businesses can simultaneously cut costs and reduce their emissions. With the right approach, it is possible for industry to achieve cost savings without sacrificing competitiveness, workforces, or the journey to decarbonization.”